Tapering
Elevated Short-Term Risks
The S&P 500 and NASDAQ Composite moved to new bull market highs in early September, but our quantitative work continues to warn there’s a least a short-term speed bump ahead for the stock market.
Market Breadth And Leadership
While the lagging action of Small Caps should be monitored, persistent strength in most stock market breadth measures makes it difficult to argue the stock market has entered a true “distribution” phase.
Stock Market Valuation Check
Stocks might look superficially cheap relative to bond yields, but they continue to offer little appeal in an “absolute” valuation sense.
Why We Think Tapering Is Tightening
We believe the first move toward tighter policy occurred in January when the Fed first reduced the rate of its monthly bond purchases by $10 billion to $75 billion.
Premature Inflation Fears
With commodity prices falling in recent months and consumer prices in the Eurozone almost flat over the latest 12 months, we’re surprised that inflation fears continue to climb the list of U.S. investor worries.
Share Buybacks: They’re Not For Everyone...
Share repurchase activity in the S&P 500 dropped off in the second quarter, after first quarter buybacks challenged the all-time high levels seen in the second and third quarters of 2007 (a window of history that should ring a bell).
The Bond Bull And The Dollar
Surging bond prices in Europe have opened a yield gap with the U.S. This premium favors more dollar strength in the coming months. In equity markets, the short term volatility in the dollar is a mildly bearish signal.
Boring Is Best In The Forex Markets
Statistically, stocks perform a bit better in an environment of dollar strength than dollar weakness. The best stock market action, however, occurs when there’s relative calm in the forex markets.
A Catalyst For Energy?
While a new secular bear market in commodities commenced in 2011, we still look for tactical opportunities in commodity-oriented stocks to arise from time to time.
Gold Set To Tumble Again?
Gold market fundamentals appear superficially bullish...
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